The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.

The Outreach and Education function engages, empowers and educates the Second District communities that the Bank serves, especially civic leaders, students, educators, small business owners, policymakers and the general public. It furthers the Bank's commitment to the region by listening to the communities we serve and leveraging our unique attributes to positively impact school and university programs, as well as analysis and research.

The Basel II Accord, the new bank regulatory regime now in final development, rests upon three pillars: 1) adequate bank capital, 2) supervisory review of bank capital, and 3) disclosure and market discipline of banks. The first two pillars have been highly scrutinized already, hence the focus here on Pillar 3: disclosure of information about prospects and risks by banks to investors and the discipline that investors apply in response.

A theme emerged from several papers: the strength of investor discipline depends on supervisory discipline, and vice versa. If investors can expect supervisors to take prompt corrective action toward troubled banks, supervisors can rely on investors, via signals from bank bond and stock prices, to help identify those banks.

Contents of the volume:

Opening Remarks by Jamie B. Stewart, Jr., of the Federal Reserve Bank of New York (first vice president from 1999 through early 2004) 2 pages / 47 kb